Bank Reconciliation and Entries The cash account for Coastal Bike Co. at October 1, 2099, indicated a balance of $13,270. During October, the total cash deposited was $65,970 and checks written totaled $61,250. The bank statement indicated a balance of $22,360 on October 31, 2049. Comparing the bank statement, the canceled checks, and the accompanying memos with the records revealed the following reconciling items: a. Checks outstanding totaled $9,960. b. A deposit of $8,110, representing receipts of October 31 had been made too late to appear on the bank statement c. The bank had collected for Coastal Bike Co. $4,290 on a note left for collection. The face of the note was $3,960. d. A check for $490 returned with the statement had been incorrectly charged by the bank as $940. e. A check for $520 returned with the statement had been recorded by Coastal Bike Co. as $250. The check was for the payment of an obligation to Rack Pro Co. on account. f. Bank service charges for October amounted to $60. 9. A check for $990 from Bay View Condos was returned by the bank due to insufficient funds. Instructions: 1. Prepare a bank reconciliation as of October 31, 2049. Coastal Bike Co. Bank Reconciliation October 31, 2049 Cash balance according to bank statement Adjustments: Deposit of October 31, not recorded by bank Bank error in charging check as $940 instead of $490 Outstanding checks 22,360 8,110 450 9,960 - 1,400 ho 20,960 Total adjustments Adjusted balance Cash balance according to company's records Adjustments: Proceeds of note collected by bank, including $330 interest Check returned because of insufficient funds 13,270 X 4,290 990 Bank service charges 60 13,270 X s 4,290 Cash balance according to company's records Adjustments: Proceeds of note collected by bank, including $330 interest Check returned because of insufficient funds Bank service charges Error in recording check Total adjustments 990 60 270 2,970 Adjusted balance 20,960 Feedback Check My Work 18 3. Set up two sections: one for the company cash account section and the other for the bank balance section Determine the effect of the data on each section. Recall that when you are finished, the adjusted balances in the bank and company sections of the reconciliation must be equal. If not, an item has been overlooked or treated in error. Recall that the company's cash account balance is updated for any items in the company section of the bank reconciliation Learning Objective 5. 2. Journalize the necessary entries (a.) that increase cash and (b.) that decrease cash. The accounts have not been closed. For a compound transaction, if an amount box does not require an entry, leave it blank. a. 2079 Oct. 31 Cash 4,290 Notes Receivable 3,960 Interest Revenue 330 b. Oct. 31 270 Accounts Payable-Rack Pro Co. Accounts Receivable-Bay View Condos Miscellaneous Expense 990 60 Cash 7,260 x 7,260 X b. Oct. 31 270 Accounts Payable-Rack Pro Co. Accounts Receivable-Bay View Condos 990 Miscellaneous Expense 60 Cash 7,260 7,260 X Feedback Check My Work 2. Keep in mind that the company needs to journalize any adjusting items in the company section of the bank reconciliation, because these have not been previously recorded by the company. Dobit momo items like bank service charges decrease Cash, Items that come from credit momos like collections of notes or interest by the bank increase cash It the company made an error that overstatos or understates cash in the company section, the joumal adjustment would decrease Cash or increase Cash, respectively Learning Objective 5. 3. If a balance sheet were prepared for Coastal Bike Co. on October 31, 2019, what amount should be reported as cash? 4,290 X
